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Hospitals Facing Friday Deadline to Repay Millions

June 9, 2004 – The territory's hospitals have been put on notice by Finance Commissioner Bernice Turnbull that they must quickly pay back millions of dollars on loan from the V.I. government or risk losing access to government resources used to cover their biweekly payrolls.
The warnings to Roy L. Schneider Hospital Chief Executive Officer Rodney Miller and Juan F. Luis Hospital CEO Gregory Calliste came in letters dated May 21. In them, the commissioner gave the hospitals until June 11 — which is Friday — to pay their outstanding balances, which she put at $4.5 million for Schneider and $5.7 million for Luis.
"If the outstanding balance … is not paid by June 11, access to the Payroll Module will be denied," the commissioner wrote.
Both balances, according to Juel Molloy, Gov. Charles W. Turnbull's chief of staff, represent sums for a period of time in which the government allowed the hospitals to borrow money to cover payroll expenses. The borrowed money was supposed to be reimbursed from the Health Revolving Fund resources for the respective hospitals, she said on Wednesday.
Originally the Health Revolving Fund was to cover only operating expenses, while payroll expenses were to be covered by the General Fund.
But "a few years ago," Molloy said, in an effort to cut the costs of hiring traveling nurses and doctors on contract, "the Legislature gave the hospitals permission to use the revolving funds for personnel costs. But they indicated that the personnel costs were to be limited to nurses, doctors, medical personnel."
However, she said, "instead of limiting it to that, they extended that to hire whatever kind of personnel they needed."
And, Molloy pointed out, the sums being demanded by the Finance commissioner represent just a portion of the money owed the government, dating from fiscal year 2000. As of May, according to Finance Department documents, Juan Luis Hospital owed the government $15.3 million and Schneider Hospital owed $10.7 million.
On Tuesday, Molloy and Commissioner Turnbull sat down with Calliste to discuss the situation. Calliste, who was named the St. Croix hospital's top administrator in January, said it was the first time since taking the job that he had been shown the extent of the debt against the revolving fund. He said he will have to come up with a plan to address the problem.
Also attending that Tuesday meeting was Sen. Lorraine Berry, in her capacity as vice chair of the Senate's Health, Hospitals and Human Services Committee. Berry sponsored the bill that granted semi-autonomous status to both hospitals.
Molloy suggested on Wednesday that part of the problem may stem from a breakdown in financial reporting to the executive branch as a result of semi-autonomy.
"With this semi-autonomous situation where people do not have to readily report to us, well, they should, but they don't," Molloy said. "And they're run by boards, I don't even think the board members are aware of the extent of the debt."
Amos Carty, chief operating officer for Schneider Hospital, said on Wednesday that there will be no public comment from the St. Thomas facility on the reported debt to the government until a formal response is submitted to the Finance commissioner. He said that should take place by next week.

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